Context: The Government of India recently hosted the Co-Op Kumbh 2025, an international conference held in New Delhi to mark the United Nations’ International Year of Cooperatives (IYC) 2025. Organised by the Ministry of Cooperation, the event focused on strengthening and modernising India’s Urban Cooperative Banks (UCBs)—a sector that plays a pivotal financial role in urban and semi-urban communities, yet has historically struggled with governance, technology adoption, capital adequacy, and regulatory compliance.
The conference brought together policymakers, global cooperative leaders, financial regulators, and academic experts to discuss pathways for transforming UCBs into tech-enabled, transparent, and inclusive grassroots financial institutions.
Significance of Cooperative Kumbh 2025
The Cooperative Kumbh is more than an event; it represents a renewed effort to revitalise India’s cooperative movement. UCBs serve millions of small borrowers, self-employed individuals, micro-businesses, street vendors, and low-income households.
However, in recent decades, the sector’s growth has slowed due to governance challenges, dual oversight complexities, limited digital infrastructure, and inability to compete with commercial banks and fintech platforms.
The 2025 conference aimed to reposition UCBs as strong community-based banking entities capable of serving India’s rapidly urbanising population.
Key Outcomes: The Delhi Declaration 2025
The most significant achievement of the conference was the adoption of the Delhi Declaration 2025, a strategic blueprint for the future of UCB reforms and expansion.
The declaration highlights the need for improved governance standards, technology integration, stronger regulatory coordination, and enhanced financial inclusion through urban cooperatives.
It acknowledges that while cooperatives are inherently community-centric, they require modern systems and professional management to remain viable in a competitive financial ecosystem.
One of the most ambitious commitments in the declaration is the plan to establish at least one Urban Cooperative Bank in every Indian city with a population above two lakh within the next five years.
This expansion intends to bridge financial access gaps in Tier-2 and Tier-3 cities, especially for informal workers and micro-enterprises who remain underserved by mainstream commercial banks.
Digital Transformation: Sahkar Digi-Pay and Sahkar Digi-Loan
A major highlight of the Cooperative Kumbh was the launch of two nationwide digital platforms—Sahkar Digi-Pay and Sahkar Digi-Loan.
These platforms represent a transformative step in integrating UCBs into India’s rapidly expanding digital financial ecosystem by enabling online payment systems, digital lending, automated credit assessment, and real-time transaction tracking.
The introduction of such systems also reduces operational risks, enhances transparency, and allows cooperative banks to compete with fintech innovations.
Small UCBs, which lacked digital capacity due to financial or technical constraints, can now access centralised, government-supported digital infrastructure.
Understanding Urban Cooperative Banks (UCBs)
UCBs are financial institutions owned by members of a cooperative society. They operate primarily in urban and semi-urban areas and serve customers who often remain excluded from mainstream banks.
Their legal foundation lies in the State Cooperative Societies Acts or the Multi-State Cooperative Societies Act, depending on their area of operation.
Unlike commercial banks, UCBs are governed through a dual regulatory framework, making them unique within India’s financial system.
- The Reserve Bank of India (RBI) oversees prudential norms, banking operations, capital adequacy, licensing, and risk management.
- The Registrar of Cooperative Societies (RCS)—under state or central government—oversees registration, elections, audits, and administrative matters.
This dual structure provides UCBs with autonomy and flexibility but also contributes to operational delays, regulatory overlaps, and governance vulnerabilities.
Relevance of the Cooperative Sector Today
The cooperative movement has been central to India’s socio-economic development since the early 20th century.
Today, with the emergence of digital finance, UCBs face both opportunities and challenges. They are well-positioned to serve the “missing middle” of India’s economy—micro and small entrepreneurs who are too big for microfinance but too small for commercial banks.
However, to fulfil this role, they must undergo structural and technological transformation.
The Cooperative Kumbh 2025 emphasises the need to professionalise UCB management through training, improved credit appraisal systems, better cyber-security practices, and adoption of global-level cooperative governance models.
Challenges Identified During the Conference
Participants highlighted several structural challenges:
- Limited capitalisation and inability to raise external funds
- Delays caused by dual regulation
- Governance risks arising from politically influenced management
- Poor digital infrastructure in smaller UCBs
- Rising competition from NBFCs and fintech lenders
- Lack of uniform skill development and capacity-building programmes
Without addressing these issues, UCBs may not be able to scale sustainably in the long term.
Way Forward
The Ministry of Cooperation outlined key strategies to strengthen the cooperative banking ecosystem. First, digital integration must continue through unified platforms like Sahkar Digi-Pay.
Second, reforms are needed in the dual regulatory mechanism to reduce compliance overlaps and create predictable regulatory timelines. Third, professional training programmes for UCB staff and board members should be prioritised to modernise governance.
Finally, cooperative banks should diversify their product offerings—microloans, digital credit, MSME financing, and savings products tailored to informal workers—to align with India’s urban financial needs.
Conclusion
Cooperative Kumbh 2025 marks a renewed commitment to revitalising India’s cooperative credit movement.
By combining digital innovation, institutional reforms, and expansion strategies, the initiative positions UCBs to play a greater role in inclusive urban development.
If implemented effectively, the Delhi Declaration 2025 could transform UCBs into strong, transparent, and community-driven financial institutions aligned with India’s vision of “Sahakar Se Samriddhi” and Viksit Bharat 2047.